標題: Firms in competitive market [打印本頁] 作者: SyDu 時間: 2009-2-28 20:41 標題: Firms in competitive market
For the firm's short-run decision about suuply
If Price= Average Variable Cost (P=AVC), what's the quantity of supply?
Our teacher only told us "firms shuts down if P<AVC", "firms will produce in the short-tum if P>AVC"
Thanks a lot! 作者: 來尋桃花 時間: 2009-3-1 00:42
the quantity of supply does not matter....
do u understand wt is AVC... and wt does P=AVC means?
AVC, the average variable cost
if the P is below the AVC, the firm would lost less to shut down... as the P cannot even cover up the variable cost.... e.g. wages for labour
if the P is above the AVC, although the firm is losing out... (i assume), the firm's revenue is enough for the variable cost, and some of the fixed cost... therefore the firm would stay... coz there might also be cost for shutting down or leaving the market...作者: SyDu 時間: 2009-3-1 17:19
I'm sorry but do you know that the marginal cost curve is also the supply curve?
What I ask is the situation for P=AVC...I think the quantity supply could be any below the quantity when P=AVC....Just to check if my assumption is right作者: 來尋桃花 時間: 2009-3-1 22:02
yes MC is the supply curve... MC=S MR=AR=D MC, MR, AC meet at one point
but the MAIN POINT is... if P<AVC there would be NO QUANTITY coz they would be closed.
ur question... when P=AVC, what is the quantity...
u can only say it is the min. quantity the firm would produce in the SR "no one can give u a specific value" 作者: 來尋桃花 時間: 2009-3-6 09:37
the quantity of supply does not matter....
do u understand wt is AVC... and wt does P=AVC means?
AVC, the average variable cost
if the P is below the AVC, the firm would lost less to shut down... as the P cannot even cover up the variable cost.... e.g. wages for labour
if the P is above the AVC, although the firm is losing out... (i assume), the firm's revenue is enough for the variable cost, and some of the fixed cost... therefore the firm would stay... coz there might also be cost for shutting down or leaving the market... 作者: SyDu 時間: 2009-3-6 09:48
I'm sorry but do you know that the marginal cost curve is also the supply curve?
What I ask is the situation for P=AVC...I think the quantity supply could be any below the quantity when P=AVC....Just to check if my assumption is right 作者: SyDu 時間: 2009-3-7 04:04
Anyhow, Thank you for your reply. 作者: 來尋桃花 時間: 2009-3-9 08:18
do u know how to draw the graph? if u know, u would understand 作者: SyDu 時間: 2009-3-11 13:27
Yeap ...and my result is "quantity supply could be any below the quantity when P=AVC", as I've said
